Ibovespa Futures Drop as China Growth Concern Saps Commodities

Ibovespa futures dropped as commodities from metals to crude declined amid concern that a cash crunch will limit economic growth in China, Brazil’s top trading partner.

OSX Brasil SA (OSXB3), billionaire Eike Batista’s shipping unit, may be active after denying a report by Folha de S.Paulo saying it missed a 500-million real ($221 million) payment to a service provider. The newspaper didn’t say how it obtained the information. Dental-care plan provider Odontoprev SA (ODPV3) may move after Banco Santander SA raised its recommendation to buy.

Ibovespa futures contracts expiring in August tumbled 2.4 percent to 45,900 at 9:24 a.m. in Sao Paulo. The real dropped 0.9 percent to 2.2628 per dollar. The Bloomberg Base Metals 3-Month Price Commodity Index slumped 1.9 percent. The Standard & Poor’s GSCI index of 24 raw materials fell 0.5 percent. Commodities declined after China’s central bank said that the nation should fine-tune its policies as a cash squeeze in the banking system risks exacerbating an economic slowdown.

“European stocks and U.S.-index futures are trading lower this morning due to a less favorable outlook for China,” Banco Bradesco SA’s economic team, led by Octavio de Barros, wrote in a note to clients today. “The Brazilian market should track the external outlook. We expect losses for equities.”

Economic Outlook

Economists lowered their forecast for Brazilian growth this year to 2.46 percent from 2.49 percent the previous week, according to a survey published by the central bank today.

The Ibovespa slumped into a bear market on June 11 after falling more than 20 percent from this year’s peak on Jan. 3. It has since extended those losses to 26 percent. Brazil’s benchmark equity gauge trades at 11.9 times analysts’ earnings estimates for the next four quarters, compared with 9.5 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Foreign investors have pulled 4.9 billion reais from Latin America’s largest equity market this month through June 19, data from the exchange show. Trading volume for stocks in Sao Paulo was 10.5 billion reais on June 21, compared with a daily average of 7.9 billion reais this year through June 20, according to data compiled by the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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